Walmart cuts prices on thousands of items as investors cheer plan

Walmart Inc. slashed prices on thousands of items, lifting its shares as investors bet the move will drive traffic and market share gains.

"Walmart is using its scale to force price reductions at a time when household budgets remain under pressure from elevated grocery costs," said Robin Wenzel, head of the Wells Fargo Agri-Food Institute.

The nation's largest grocer reduced the price of a pound of 73% ground beef roll to $5.94 from $6.74, a decline of about 12 percent. Other discounts include fresh sweet corn at 25 cents each from 68 cents, a 2.25-pound bag of red cherries at $5.63 from $11.18, and 24-packs of Coca-Cola at $9.97 from $14.97. The cuts come as the average price for ground beef reached $6.75 a pound in May, up 22 percent since President Donald Trump took office and about 70 percent higher than January 2021.

The price war comes at a critical juncture for Walmart, which faces slowing comparable sales even as it invests in higher-margin businesses including marketplace, advertising, and AI-powered shopping tools. Cleveland Research recently flagged signs of softening U.S. comparable sales at the retailer, raising questions about near-term margins.

President Trump claimed credit for the reductions on Truth Social, saying Walmart acted at his administration's request as part of celebrations for the nation's 250th anniversary. Walmart's own announcement made no mention of the president, instead describing the rollbacks as part of its seasonal value strategy. The political sparring shows the sensitivity of grocery prices as a key issue heading into the 2026 midterms, with inflation running at a three-year high.

Beef Supply Constraints Limit Relief

Even with Walmart's discounts, Americans are still paying near-record prices for beef. The U.S. cattle herd has shrunk to 86.7 million head as of Jan. 1, the lowest since 1951, according to the Department of Agriculture. A three-year drought that began in 2020 dried out pastures and raised feed costs, while a ban on Mexican cattle imports due to the screwworm parasite further tightened supply.

"With beef, we see the prices high because the supply is low," Wenzel said. She noted that chicken breasts and pork ribs offer cheaper alternatives, with prices up about 3 percent year-over-year versus beef's 11 percent gain.

Walmart's price cuts extend beyond beef. The company reduced prices on Lay's potato chips, Great Value ice cream, and disposable paper plates. Coca-Cola 24-packs saw one of the steepest discounts, falling 33 percent to $9.97.

Investor Calculus

For investors, the price cuts represent both opportunity and risk. Lower prices could drive higher foot traffic and basket size, potentially offsetting margin compression through volume gains. Walmart's grocery business, which accounts for more than half of its revenue, serves as a loss leader for higher-margin general merchandise and its fast-growing advertising business.

The company's long-term narrative projects $832.5 billion in revenue and $29.3 billion in earnings by 2029, requiring 4.7 percent annual revenue growth. Walmart's push into AI-powered tools, including its Sparky shopping assistant, and marketplace expansion are central to that thesis.

The broader question is whether temporary promotions can translate into sustained market share gains. Walmart's strategy of using its purchasing power to lower prices has historically pressured competitors including Target Corp. and Amazon.com Inc., both of which face their own margin constraints. Wells Fargo estimates a summer barbecue for 10 people will cost about $161, up 2.4 percent from last year, highlighting the persistent inflation pressures that Walmart's price cuts aim to address.

This article is for informational purposes only and does not constitute investment advice.